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Vol. 16, No. 8 Week of February 20, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Appeal ruling stands

EAB upholds Shell air permits remand but will rule on other appeal claims

Alan Bailey

Petroleum News

The Environmental Appeals Board has upheld its Dec. 30 remand to the Environmental Protection Agency of Shell’s air quality permits for the company’s planned drilling in the Beaufort and Chukchi seas off Alaska’s northern coast. However, the board has also agreed to rule on four permit features challenged in an appeal lodged against the permits but not addressed by the board in its remand ruling.

“The board will decide in a forthcoming order four issues not addressed in the (Dec. 30) remand order,” the Appeals Board wrote in a Feb. 10 order. “The board will decide these unresolved issues based on the merits briefs previously submitted in these appeals.”

The EAB remand of Shell’s Beaufort Sea permit has caused Shell to defer into 2012 its plans to drill a Beaufort Sea exploration well.

Appealed in 2010

In April 2010 the Native Village of Point Hope and eight environmental organizations appealed Shell’s Environmental Protection Agency air quality permits to the Appeals Board, the panel of judges with final authority over EPA decisions. And in its Dec. 30 remand order the Appeals Board said that the permits’ specifications of when a drilling vessel becomes a stationary emissions source were deficient, and that the permits should have taken into account a new EPA rule for the emissions of nitrogen oxides — the new nitrogen oxides rule had come into force after EPA started processing Shell’s permit applications but before the permits were issued.

But in remanding the permits back to EPA, the Appeals Board declined to rule on four issues raised in the appeal: whether one of Shell’s support icebreakers should be considered as an emissions source while the drillship is at anchor; the appropriate approach to regulating the emissions of certain types of fine particulate matter; the use of best available control technology analysis for particulate matter less than 10 micrometers in diameter; and the question of whether some additional activities, including oil spill response, should be considered within the scope of the emissions analysis.

Clearly concerned about the specter of multiple cycles of appeals and remands, given the as-yet unresolved permit issues, on Jan. 21 EPA petitioned the Appeals Board to clarify its December order by either ruling on all claims in the appeal or alternatively excluding the unresolved issues from the remand. EPA also asked the Appeals Board to rule that any subsequent appeal of the permits go direct to federal court, rather than back to the board.

Shell also weighed in, supporting the EPA petition and, in addition, challenging the Appeals Board rulings on the definition of an offshore emissions source and on the application of the new nitrogen oxides rule. Shell also asked the board to set a time limit for EPA’s rework of the permits.

In its Feb. 10 order the Appeals Board accepted EPA’s concerns about the unresolved appeal issues. However, the board refused to order that any subsequent appeal should go direct to federal court — because the permit features under remand are fundamental to the content of the permits and because the Shell permits will likely set a national precedent for future OCS air quality permitting, the Appeals Board needs to be involved in any future appeal, the Appeals Board said. Moreover, with Shell in the process of modifying its exploration plans, the revised permits may require new features and thus differ significantly from the permits that the board remanded, the board also said.

The Appeals Board rejected Shell’s challenge to the board’s ruling on the two issues that triggered the remand of the permits. Essentially, the board said that its role was to evaluate the adequacy of EPA’s permitting decision and that Shell had not provided grounds for the board to reconsider its assessment of that decision. The board also rejected Shell’s request for a deadline for EPA’s rework of the permits, saying that there is no precedent for the board to impose a time schedule on a permitting authority and that the extent of the changes that EPA will need to make to the permits is unknown.

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